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Federal Communications Commission releases Notice of Proposed Rule Making on open internet

Executive Summary: The FCC on May 15, 2014 issued a Notice of Proposed Rule Making in response to the Court of Appeals partial vacation of the FCC’s 2010 Open Internet rules. The new proposed rules are substantially similar to the rules adopted in 2010 with slight modifications to address the Court’s finding that the 2010 Anti-Blocking and Anti- Discrimination Rules exceeded the authority granted to the FCC by Section 706 of the Communications Act.

Comments are due in the Notice of Proposed Rule Making by July 15, 2014, and Reply Comments are due September 10, 2014.

On May 15, 2014, the Federal Communications Commission (FCC) issued a Notice of Proposed Rule Making (NPRM) in GN Docket No. 14-28 (2014 NPRM). The purpose of the NPRM is to “establish the right policy to ensure that the Internet remains open.”

Background

In 2010, the FCC established rules in the Open Internet Order designed to “create and determine the success or failure of content, applications, services and devices,” without requiring permission from the broadband provider to reach end users. Four years later in Verizon v. FCC, the D.C. Circuit reviewed the Order and affirmed in part, vacated in part, and remanded it in part. The circuit court found that the FCC justified the need for the Open Internet Rules and found that Section 706 of the Telecommunications Act of 1996 provided the FCC with sufficient statutory authority for its Disclosure Rules. The court, however, found that the Commission’s Anti-Blocking and Anti- Discrimination rules attempted to impose common carrier regulations under Title II of the Communications Act (47 U.S.C. §§ 201 et seq.) on broadband providers. Since the FCC has not defined broadband providers as common carriers, Title II regulations cannot apply to them.

2014 NPRM

The 2014 NPRM seeks to adopt rules, consistent with the FCC’s statutory authority under Section 706, that will keep the Internet open and preserve and facilitate the “virtuous circle” of innovation, demand for Internet services, and deployment of broadband infrastructure which presently exists. In the alternative, the FCC seeks comment on other justifications for its proposed rules. The FCC also asks for comments on whether it should regulate broadband providers under Title II as common carriers.

It is commonly recognized that there are four elements to the Internet: (1) backbone networks; (2) broadband providers; (3) edge providers; and (4) edge users. In the typical Internet interaction the edge provider (e.g. Netflix, Google, or Amazon) transports its information from its own facilities to a backbone provider (e.g. Akamai, EdgeCast, Limelight, or Level 3, or cloud service providers such as Amazon, Microsoft, or RackSpace); the backbone provider connects to the broadband provider (e.g. Comcast, or Fios); and the broadband provider, in turn, delivers the information to the end user (the customer). The 2014 NPRM only addresses regulation of the broadband provider.

In the 2010 Order, the FCC concluded that rules governing broadband providers are necessary because broadband providers have multiple incentives to limit the openness of the Internet. From an economic perspective, broadband providers may have incentives to block or disadvantage a particular edge provider or segment of edge providers. To increase revenue, broadband providers could choose to charge edge providers additional fees for access, or

prioritized access, to end users. Excessive fees charged to edge providers for such access could have the effect of reducing new edge provider entry into the market, suppression of innovation and a reduction in consumer demand. Finally, the FCC concluded that if broadband providers could charge for prioritized service, the broadband providers could be incentivized to degrade service to non-prioritized edge providers.

In the 2014 NPRM it is the Commission’s position that the threats present when the 2010 Order was issued have only grown in importance over the last four years as Americans have become more reliant on the Internet. Thus, the new rules are an attempt to once again impose regulations on broadband providers with the intent of protecting the openness of the Internet.

The 2014 NPRM seeks comments on the following principal questions:

1. Transparency Requirements

a.he currentransparencyrue requres:

“A person engaged in the provision of broadband Internet access service shall publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding the use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.”

The rule would operate independently of the no-blocking rule, which means that conduct acceptable under the no-blocking rule could still be subject to review under the commercially reasonable standard.

The FCC seeks comment on whether there are sources of law or practice the Commission should rely upon in explaining the meaning and application of that standard.

The FCC also seeks comment on how a rule requiring broadband providers to engage in commercially reasonable practices with respect to delivery of traffic to and from end users should apply in circumstances in which no individualized negotiation occurs between the edge provider and the broadband provider.

Impact on Present and Future Competition. The FCC seeks comment on to what extent should competition-oriented factors focus on market structure and the extent of competition in a given market;

Impact on Consumers. The FCC believes that consumers of broadband access service should have the ability to exercise meaningful choices. How can it factor consumer choice into the analysis of what is commercially reasonable?

Impact on Speech and Civic Engagement. The FCC is looking for a factor or factors in applying the commercially reasonable standard that assess(es) the impact of broadband provider practices on free exercise of speech and civic engagement.

If an agreement between a broadband provider and edge provider is non-exclusive and if the edge provider is not an affiliate of the broadband provider, should it be exempt from the non- discrimination rule?

9. Legal Authority

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PROPOSED RULES

Part 8 of Title 47 of the Code of Federal Regulations is amended as follows:

PART 8 – PROTECTING AND PROMOTING THE OPEN INTERNET

Sec.

8.1 Purpose.

8.3 Transparency.

8.5 No Blocking.

8.7 No Commercially Unreasonable Practices.

8.9 Other Laws and Considerations.

8.11 Definitions.

AUTHORITY: 47 U.S.C. §§ 151, 152, 154(i)-(j), 303, 316, 1302

§ 8.1 Purpose.

The purpose of this Part is to protect and promote the Internet as an open platform enabling consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission, and thereby to encourage the deployment of advanced telecommunications capability and remove barriers to infrastructure investment.

§ 8.3 Transparency.

A person engaged in the provision of broadband Internet access service shall publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services, in a manner tailored (i) for end users to make informed choices regarding use of such services, (ii) for edge providers to develop, market, and maintain Internet offerings, and (iii) for the Commission and members of the public to understand how such person complies with the requirements described in sections 8.5 and 8.7 of this chapter.

In making the disclosures required by this section, a person engaged in the provision of broadband Internet access service shall include meaningful information regarding the source, timing, speed, packet loss, and duration of congestion.

In making the disclosures required by this section, a person engaged in the provision of broadband Internet access service shall publicly disclose in a timely manner to end users, edge providers, and the Commission when they make changes to their network practices as well as any instances of blocking, throttling, and pay-for-priority arrangements, or the parameters of default or “best effort” service as distinct from any priority service.

§ 8.5 No Blocking.

A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management.

A person engaged in the provision of mobile broadband Internet access service, insofar as such person is so engaged, shall not block consumers from accessing lawful websites, subject to reasonable network management; nor shall such person block applications that compete with the provider’s voice or video telephony services, subject to reasonable network management.

§ 8.7 No Commercially Unreasonable Practices.

A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not engage in commercially unreasonable practices. Reasonable network management shall not constitute a commercially unreasonable practice.

§ 8.9 Other Laws and Considerations.

Nothing in this part supersedes any obligation or authorization a provider of broadband Internet access service may have to address the needs of emergency communications or law enforcement, public safety, or national security authorities, consistent with or as permitted by applicable law, or limits the provider’s ability to do so.

Nothing in this part prohibits reasonable efforts by a provider of broadband Internet access service to address copyright infringement or other unlawful activity.

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